I cannot begin to stress enough at just how important affordability is for when it comes to finance and borrowing money in particular. If a financial product is obtained but is then not affordable then the chances are the payments will be missed. Missing such requirements can often have severe negative consequences for that person and most people will then often be keen to avoid this from ever happening. It will not matter whether someone is looking to borrow short term payday loans, installment loans for probably higher loan amounts or even credit cards they have to be repaid back as agreed with the lender but in order for this to happen they have to always be affordable. Below is a helpful tip that can be useful to check affordability on finance and there will also be information on how some borrowing is more realistic for people to repay than others. I have found that a good way to test if finance is affordable on short term payday loans and other borrowing would be for someone to locate what on average their disposable income is. This could vary from month to month but it still should give people a clear understanding as to whether finance is affordable. People use the disposable income amount to see if they can afford to have set amounts deducted from their spare income regarding any future borrowing they may obtain. People can locate this income amount by looking to any month ahead and then adding all their income expected for that period of time. This can include their wages from work plus any benefits or credits they are due for that period etc. Then from that amount the same person over the same time frame can then deduct all their expenditure. This can then include their rent costs, any debts they may have as well as other expenditure required such as basic transport and food costs for example. The amount left over for that person is the disposable/spare income. If that amount is then the chances are the finance is affordable however, if low or if it does cover a set payment to become due then no application can then ever be made.
It can be common that some ways of borrowing are more affordable and then realistic for people to repay than others. Take payday loans as the borrowing option, when these are borrowed people have to repay the debts back in full with relatively high interest just as soon as they are paid again from their employer. Now for a high number of different people repaying any loan back in full will be tough and at times it won’t be affordable. Here other short term loans can then help including short term payday loans. These can be obtained for the same kind of amounts of usually up to £500.00 but then rather than repaying the debt in one go on their next payday people can often spread the cost of the debt. This has to be the better option as it is more affordable product that is easier to repay albeit more may overall be repaid back to the lender in total.
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